Caribbean storms: some win, some lose

The other day one I have written some thoughts about how economy developed in Hungary and some other European countries. A friend of mine from Cube have seen this piece asked me to have a similar look what happened with her home country during the past few decades. I have become interested, so this morning I took a look again on the Maddison Project data and here I show what I have found and how I interpret it.

Again, I use the GDP per capita data from selected countries in the Caribbean region. I have selected four countries to have a closer look: Cuba, the Dominican Republic, Haiti, Jamaica, and Trinidad and Tobago. I used data from Brazil and Mexico as some kind of regional reference only for comparison. 

I would like to start again with the disclaimers:

1. I am not a historian nor an economist, I am just a guy interested in these topics and have an easy way with numbers and data. My conclusions are mine with all my misunderstanding and sometime lack of knowledge.
2. I am aware that GDP per capita data is not a good indicator of life standard, but it is hard to deny that it correlates very well how people in a country senses their levels of life. It is still true that when this measure goes upward people feel that life is getting better. Similarly, people tend to see countries with higher GDP per capita as better to live in. Maybe once I will have a closer look on how international migration follows the GDP per capita of countries.

With all of these stated, let’s have a first look on the raw values.

 

Well, it is nice, but Trinidad and Tobago over-performs everybody in the cohort so much that we can hardly see what is going on with others. Let’s just forget them for a minute and see what is happening with the others.

No big surprises here, Mexico and Brazil are on the top, and there is some development in most of the countries. With the exception of Haiti. Haiti struggles do develop its economy ever since we have data, and actually from the beginning of the 80’s, it is going down and down. Haiti and the Dominican Republic are the western and eastern part of the same island called Hispaniola. It is a very interesting question why they have run such a different paths. After WWII, in the early 50’s they have started from the same economic levels, but while DomRep is one of the eminent performer while Haiti is the poorest country in the Western Hemisphere, and running close to claim the title in the whole world. There is debate, and some people wrote on the topic some articles, but it is hard not to notice that while DomRep has diverse political and economic systems, Haiti has been in the state of anarchy for much of its independent history.

During the 50’s many of these countries were torn by independence movements and dictatorships. Since my main focus is on Cuba, I wanted to see how its political system influenced its economy. I have chosen 1958 as a reference year, which was the last year of “free economy” in Cuba, after which the Castros took over ruling the country.

We can see interesting developments and dramatic course changes. Before the 50’s countries from which we have data, so Cuba, developed head-to-head with Mexico, Brazil, and Jamaica. 1958, the year of Castro, marks the course change for Cuba. After that point Cuban economy has grown minimally until the end of 90’s. At that point the collapse of the Soviet Union caused the so-called “Special Period”, when Cuba lost approximately 80% of its imports, 80% of its exports and its Gross Domestic Product dropped by 34%. There was a serious famine and shortage of practically any modern goods considered needed for everyday life. Cuba has recovered slowly to the levels of 1990 only by mid-2000’s.

Other countries have seen serious events too. Jamaica gained independence from the UK in 1962 and sported a steady development of economy comparable to Brazil, Mexico, Trinidad and Tobago, and others. In 1972 they got bored with this course, so they have decided to choose the Cuban model and elected the People's National Party to power. As a good peoples’ party, they started immediately to deliver public services to the people without caring much about where the funding is coming from. Alas, they have managed to correct the course of Jamaica following the Haitian and Cuban example of economic success.

To be fair, we have to mention that non-socialistic countries were not spared of shocks either. Many countries of the region were suffering of the so called Latin American debt crisis caused by financing their economies from external loans. The solution of this crisis caused a huge loss in the standard of life in countries like Brazil, Mexico, and Trinidad and Tobago. These countries struggled for more than a decade to grow back to their pre-crisis level.

I am very interested in the general courses which these very different economies run.

The reference trend is of the countries which have managed to double their GDP per capita between 1958 and the late 70’s, and practically tripled it by 2010. On the other hand I see outright stagnation in Cuba and Jamaica (after 1972), and outright decline in Haiti. Should I say more? “Viva la revolución!”

R code for making the plots